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Canada Revenue Agency is right to offer tax snitches a bounty: Editorial

The Canada Revenue Agency is right to set up a hotline for people willing to snitch on big international tax avoiders, along with paying a bounty.

Revenue Minister Kerry-Lynne Findlay has announced a hotline for people willing to snitch on big international tax avoiders. (Adrian Wyld / THE CANADIAN PRESS)

Thu., Jan. 16, 2014

Canada now pays people for snitching on tax cheats. But don’t expect a windfall for turning in some neighbour hiding rent from an illegal basement apartment.

Informants will be rewarded only for revealing major international tax scams, and only if the government manages to reap more than $100,000. Tipsters are eligible for between 5 and 15 per cent of what’s recovered, depending on the usefulness of information provided. But, be warned, anyone actually taking part in the tax rip-off is barred from collecting a pay-out.

All that puts relatively few Canadians in a position to cash in through the bounty system. But every taxpayer profits in another way — forcing scammers to pay their fair share means easing the burden on everyone else.

When people dodge taxes by illegally hiding assets in a foreign jurisdiction, it “undermines the integrity and fairness of Canada’s tax system,” Revenue Minister Kerry-Lynne Findlay said in launching the snitch service. And she’s right.

Rewarding insiders to turn whistleblower is a new direction for Canadian tax authorities. In the past, it was considered so unseemly that potential snitches, demanding a bounty, were turned away. But other countries have effectively used this strategy. The U.S. Internal Revenue Service, for example, famously paid a Swiss banker more than $100 million in 2012 for inside information on a bank’s illegal shenanigans.

A bounty system is certainly worth trying. Just knowing it exists may deter some would-be fraudsters from breaking the law. The potential for reward here seems large enough to tempt canaries into singing, so there’s more likelihood now that wrongdoers will be exposed.

If the snitch line proves unwieldy, due to a flood of bad tips and poor information from people just looking for a payout, the program can be readily wrapped up. Hopefully, it will work as planned and generate a high-profile arrest in fairly short order.

Federal authorities would recover some much-needed revenue but, beyond that, it would send a shudder through other big-money tax dodgers. They’ll know their elaborate schemes could come crashing down with a simple call from a whistleblower tempted to cash in.

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